THIRD SECTION
DECISION
Application no. 34302/16
Fortunato PADILLA NAVARRO
against Spain
The European Court of Human Rights (Third Section), sitting on 6 November 2018 as a Chamber composed of:
Vincent A. De Gaetano, President,
Branko Lubarda,
Helen Keller,
Dmitry Dedov,
Pere Pastor Vilanova,
Alena Poláčková,
María Elósegui, judges,
and Stephen Phillips, Section Registrar,
Having regard to the above application lodged on 4 June 2016,
Having deliberated, decides as follows:
THE FACTS
1. The applicant, Mr Fortunato Padilla Navarro, is a Spanish national who was born in 1939 and lives in Barcelona. He was represented before the Court by Mr S. Molina Basalo, a lawyer practising in Barcelona.
A. The circumstances of the case
2. The facts of the case, as submitted by the applicant, may be summarised as follows.
3. The applicant has been in receipt of a retirement pension since 1999. His pension was based on previous contributions to the social security system, and amounted to 65% of a basic rate of EUR 1.215,11 per month.
4. Section 48.1.1 of the General Social Security Act (Ley General de la Seguridad Social – hereinafter “the LGSS”), as in force at the material time, provided that social security pensions under the contributory scheme, including the amount of the minimum pension, would be revalued at the beginning of each year in line with the consumer price index (CPI) expected for that year.
5. Section 48.1.2 of the LGSS provided that if the accumulated consumer price index corresponding to the period from November of the previous year to November of the year to which the revaluation related was higher than the expected index in line with which the revaluation had been calculated, an update would be made in accordance with what was provided in the respective State General Budget Act. To that effect, pensioners whose pensions had been subject to revaluation in the earlier annual period would receive the difference in a one-off payment, before April 1st of the subsequent annual period.
6. In accordance with section 48.1.1 of the LGSS, the pension of the applicant was increased by 2% for 2012.
7. In the context of the financial crisis which started in 2008 in Spain, the Spanish government adopted and implemented measures to consolidate and guarantee the social security system (Royal Decree no. 28/2012). The preamble provided that the measures had to be adopted as an extraordinary and urgent need under circumstances in which the social security system had to use its reserve funds, and they were aimed at complying with the budget deficit target.
8. Royal Decree no. 28/2012 cancelled the revaluation of pensions for the year 2012 provided for in section 48.1.2 of the LGSS, and suspended the revaluation for the year 2013 provided for in section 48.1.1 of the LGSS. It also provided that pensions would be increased by 1% for the year 2013, taking as a reference the amount legally established in 31 December 2012 (2% regarding pensions of no higher than EUR 1,000 per month).
9. In line with those provisions, in January 2013 the National Social Security Institute (Instituto Nacional de la Seguridad Social – hereinafter “the INSS”) notified the applicant of the revaluation of his pension with effect from 1st January. It applied an increase of 2%, although, as submitted by the applicant, the real CPI in November 2012 amounted to 2.9%.
10. The applicant brought proceedings against the INSS before Labour Court no. 18 of Barcelona. He requested an increase of his pension in accordance with the CPI of November 2012 (2.9%) corresponding to the period from 1 January to 30 November 2012. The applicant submitted, inter alia, that the revaluation provided for in section 48.1.2 of the LGSS in the aforementioned period of time could not be affected by the provisions of Royal Decree no. 28/2012 since the latter had entered into force on 1 December 2012. Thus, its application to that period would infringe Article 9 § 3 of the Constitution, which forbade the retroactivity of legislation restricting individual rights.
11. The Labour Court delivered its judgment on 23 October 2015. It dismissed the claim holding, inter alia, that the infringement of constitutional provisions by Royal Decree no. 28/2012 had been ruled out earlier by the Constitutional Court. Indeed, in a judgment delivered on 5 March 2015 in constitutionality proceedings (recurso de inconstitucionalidad) instituted by a group of 146 members of parliament (see paragraph 16 below), the Constitutional Court found that in the light of the wording of section 48.1.2 of the LGSS pensioners were not entitled to an automatic revaluation of their pensions in line with the real CPI, since the effective revaluation was referred to the State General Budget Act, allowing a certain margin of appreciation to the legislature. It follows that when Royal Decree no. 28/2012 was passed, pensioners did not have a vested right to a revaluation, but a mere expectation, which rendered the measures implemented by Royal Decree no. 28/2012 compatible with Article 9 § 3 (principle of non-retroactivity of legislation) and Article 33 § 3 (expropriation requirements) of the Constitution.
12. The applicant lodged an amparo appeal with the Constitutional Court. It was declared inadmissible in a decision delivered on 11 May 2016 on the grounds that he had failed to justify the constitutional relevance of the appeal.
B. Relevant domestic law and practice
13. The relevant provisions of the Constitution are as follows:
Article 9 § 3
“The Constitution guarantees the principle of legality, the hierarchy of legal provisions, the publicity of legal statutes, the non-retroactivity of punitive provisions that are not favourable to or restrictive of individual rights, the certainty that the rule of law shall prevail, the accountability of public authorities, and the prohibition of arbitrary action of public authorities.”
Article 33
“1. The right to private property and inheritance is recognised.
2. The social function of these rights shall determine the limits of their content in accordance with the law.
3. No one may be deprived of his or her property and rights, except on justified grounds of public utility or social interest and with a proper compensation in accordance with the law.”
Article 50
“The public authorities shall guarantee, through adequate and periodically updated pensions, a sufficient income for citizens in old age. Likewise, and without prejudice to the obligations of the families, they shall promote their welfare through a system of social services that provides for their specific problems of health, housing, culture and leisure.”
14. Section 48 of the General Social Security Act (Ley General de la Seguridad Social – the “LGSS”), as in force at the material time, provided as follows:
Section 48
“1.1 Social security pensions under the contributory scheme, including the amount of the minimum pension, shall be revalued at the start of each year in line with the corresponding consumer price index expected for that year.
1.2 If the accumulated consumer price index corresponding to the period from November of the previous year to November of the year to which the revaluation relates is higher than the expected index in line with which the revaluation was calculated, the corresponding update shall be made in accordance with what is provided in the State General Budget Act.
To that effect, pensioners whose pensions were subject to such revaluation in the previous annual period shall receive the difference in a one-off payment, before the 1st of April of the following year ...”
15. Royal Decree no. 28/2012 of 30 November 2012, on measures to consolidate and guarantee the social security system, in force since 1 December 2012, provides as follows:
Section 2. Pensions update and revaluation
One. The pensions update in the terms laid down in [section 48.1.2] of the consolidated text of the General Social Security Act passed by Royal Decree no. 1/1994 of 20 June ... shall be cancelled for the year 2012.
Two. The application of the regulation laid down in [section 48.1.1] of the consolidated text of the General Social Security Act passed by Royal Decree no. 1/1994 of 20 June ... shall be suspended for the year 2013.
Second Additional Provision
Pensions (...) will be increased in 2013 by 1%, taking as a reference the amount legally established on 31 December 2012.
Nevertheless, an additional 1% shall be added to the increase provided for by the State General Budget Act for the year 2013 for all those pensions that do not exceed EUR 1,000 per month or EUR 14,000 per year. These pensions, therefore, will be increased by 2%.
16. Judgment no. 49/2015 of 5 March 2015, delivered by the Constitutional Court in constitutionality proceedings (recurso de inconstitucionalidad), concerns an action brought by a group of 146 members of parliament challenging the compatibility of the provisions of section 2.1 of Royal Decree no. 28/2012 with the Constitution. Firstly, they argued that the suspension of the revaluation of pensions under the contributory scheme infringed the constitutional guarantee of non‑retroactivity of legislation restricting individual rights, as enshrined in Article 9 § 3 of the Constitution, jointly considered with the constitutional mandate to periodically revalue pensions to ensure a sufficient income (Article 50).
17. The court stressed that the protection of an individual right depended on its nature and more or less full assumption by the individual, namely on its incorporation into the individual’s legal assets, so that non-retroactivity only applied to vested rights, assumed and incorporated into the individual’s assets, and not to pending, future or conditioned rights and expectations. It follows that it may only be asserted that a rule is retroactive within the meaning of Article 9 § 3 of the Constitution when it has an impact on “enshrined relations” and affects “exhausted situations”.
18. The court highlighted the fact that section 48.1.2 of the LGSS did not entitle pensioners to automatically receive the difference between the expected CPI and the real CPI, since it referred the revaluation to the State General Budget Act. That meant recognising that the legislature had a certain margin of appreciation to deal with the revaluation of pensions depending on the economic possibilities of the system, and therefore the State General Budget Act was empowered to decide the extent of the revaluation. The court concluded that when Royal Decree no. 28/2012 was passed, pensioners only had a mere expectation to receive the difference between the real CPI and the expected CPI, and as this expectation had to be specified by the State General Budget Act for each financial year, for 2012 it was cancelled because it was suspended before being consolidated.
19. Secondly, the appellants submitted that the challenged provision breached Article 33 § 3 of the Constitution, arguing that there had been an expropriation without compensation. The court, in line with its previous findings, held that the said provision was “consistent with Article [33 § 3 of the Constitution] in so far as its application did not amount to the expropriation of vested patrimonial rights”, and that “pensioners have been deprived of a mere expectation but not of a current vested right, therefore, this deprivation [cannot be considered expropriation]”.
20. The same doctrine was reiterated in subsequent judgments of the Constitutional Court (nos. 95/15 of 14 May 2015, 109/15 of 28 May 2015, and nos. 116/15 to 135/15, all of 8 June 2015).
COMPLAINT
21. The applicant complained under Article 1 of Protocol No.1 to the Convention about the reductions of his pension caused by the measures provided for in Royal Decree no. 28/2012. In particular, he submitted that he had lost 1% in terms of purchasing power since for the year 2013 pensions had only been increased by 1.9% while the consumer price index that year had amounted to 2.9%. He further stated that this reduction had to be deemed substantial given the price rise of basic goods, such as electricity and gas, and that the government should have opted for less burdensome measures for pensioners.
THE LAW
22. The applicant relied on Article 1 of Protocol No. 1 to the Convention, which reads as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
23. He alleged a breach of his right to protection of property owing to the application of the measures introduced by Royal Decree no. 28/2012 concerning the revaluation of pensions.
24. As regards the measures laid down in section 2.2 of Royal Decree no. 28/2012 (suspension of the regular revaluation of pensions for the year 2013), the Court observes, at the outset, that the applicant’s submissions raise doubts about compliance with the requirement to exhaust domestic remedies (Article 35§ 1 of the Convention), since those particular measures were not challenged in the domestic proceedings brought by the applicant, which were focused on the provisions of section 2.1 of Royal Decree no. 28/2012.
25. As to the measures adopted in the Royal Decree (cancellation of the adjustment of pensions in line with the CPI in year 2012) the Court notes that it is also questionable in the light of the rulings of the Constitutional Court (see paragraphs 16 to 20 above) whether there is a legitimate expectation that may fall under the scope of Article 1 of Protocol No. 1 (see Kopecký v. Slovakia [GC], no. 44912/98, §§ 45-52, ECHR 2004‑IX), given that it was considered that the effective enjoyment of the revaluation was dependent on the content of the future State General Budget Act.
26. Nevertheless, the Court does not find necessary to examine these questions, as far as the application meets another inadmissibility ground.
27. The Court has recently set out general principles governing the loss of social benefits and allowances, which are summarised in Krajnc v. Slovenia (no. 38775/14, §§ 40-42, 31 October 2017), citing Béláné Nagy v. Hungary ([GC], no. 53080/13, ECHR 2016). Furthermore, it has also considered austerity measures, some of them highly intrusive, taken by Contracting Parties in response to the financial crisis that has beset Europe since 2008 on previous occasions and deemed them not to violate Article 1 of Protocol No. 1 (P. Plaisier B.V. and Others v. the Netherlands (dec.), nos. 46184/16, 47789/16 and 19958/17, 7 December 2017, §§ 72‑76).
28. Applying those principles to the instant case, the interference complained of was lawful in terms of domestic law, as it was directly prescribed by legislation, Royal Decree no. 28/2012, that had a general scope of application (see paragraph 15 above). Likewise, having regard to the wide margin of appreciation available to the legislature in implementing social and economic policies (see Béláné Nagy, cited above, §§ 113 and 114), the impugned interference doubtlessly pursued the legitimate aim of protecting the public purse in the context of a severe financial crisis which had an impact on the social security system (see paragraph 7 above).
29. The crucial issue in the present case concerns the proportionality of the interference. The case at hand only regards a partial reduction of the adjustment of pensions in accordance with the variation of the consumer price index that was provided for in section 48 of LGSS. The suppression of the ordinary adjustment was mitigated by the Second Additional Provision of Royal Decree no. 28/2012, which provided for a minimum revaluation of 1% for year 2013, and 2% for the lowest pensions (see paragraph 15 above).
30. Accordingly, the pensions affected by the impugned measures were in fact nominally increased, even though as the increase was lower than the percentage variation of the CPI, the measures amounted to a loss of purchasing power. In particular, the applicant alleged that he had suffered a loss of 1% with respect to the expected increase of his pension in accordance with the CPI for the year 2013.
31. In view of the foregoing, the Court must stress the limited extent of the reduction. The case at issue does not concern a complete loss of pension entitlements (compare Béláné Nagy, cited above, § 123; Apostolakis v. Greece, no. 39574/07, 22 October 2009; and Kjartan Ásmundsson v. Iceland, no. 60669/00, ECHR 2004‑IX). Nor does it entail a substantive reduction of the pension compared to previous situations that have been examined by the Court. In Krajnc (cited above), where the reduction had been half of the applicant’s disability benefit, the Court found a violation of Article 1 of Protocol 1; conversely, the infringement was rejected in Mockiené v. Lithuania ((dec.), no. 75916/13, 4 July 2017), where there had been a reduction of 15% of a service pension, and in da Silva Carvalho Rico v. Portugal ((dec.), no. 13341/14, 1 September 2015), where there had been a reduction of 4.6% of the applicant’s total annual social security benefits.
32. In general terms, the deviation from the CPI resulting from the challenged measures cannot be deemed to have compromised the living standards of pensioners in a manner resulting in the impairment of the essence of their rights (see, mutatis mutandis, Béláné Nagy, cited above, § 118) and the applicant has not argued that the limited increase of his pension actually jeopardised his only means of subsistence or placed him at risk of having insufficient means to live on.
33. Furthermore, there is no evidence of any arbitrariness or discrimination in the legal amendments on retirement pensions. As in Mockiené (cited above, § 44), and da Silva Carvalho Rico (cited above, § 45), the Court must reiterate that the possible existence of alternative solutions to address the economic crisis does not itself render the contested measures unjustified. Provided that the authorities remain within the bounds of their margin of appreciation, it is not for the Court to decide whether the contested measures represented the best solution for dealing with the problem or whether the authorities should have exercised their discretion in another way.
34. In the light of the above, the Court finds no reason to deny that a fair balance was preserved between the interests at stake, and there is no appearance that the applicant had to bear an individual and excessive burden.
35. It follows that the applications is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 29 November 2018.
Stephen PhillipsVincent A. De Gaetano
RegistrarPresident
Full & Egal Universal Law Academy